Monday, September 19, 2016

Corporate Bond Market

US Equity Futures are strong to start the week with the DJ Futures +87 and the S&P Futures +10. The global tone is positive with overseas equities trading higher through the overnight. Oil is up to $43.62/ barrel and rates are also stronger with the 10yr Treasury last at 1.68%. Credit feels firm with the Invest Grade Index showing 74.3/74.8 and cash is also up this morning.

In credit news, last week’s primary market saw $48.75bn priced in Investment Grade Credit and over $108bn MTD. September has exceeded $15bn in High Yield with four more deals worth $1.65bn on the calendar. Today is expected to be a heavy day in new issuance led by Shire Acquisitions.

In economic data, the NAHB will be announcing the Housing Market Index for Sept.

Municipal Bond Market        
Munis are unchanged this morning after a quiet trading session to end the week.  The primary was in focus for most of last week with one of the largest calendars of the year.  Demand for lower coupons was weaker than we have seen over the past month as dealers continue to struggle to move to move retail structure paper.  New issuance will hit $8.5bln this week compared to a yearly average of about $7.5bln.  Highlights of this week’s calendar include $1.1bln from the Dorm Authority of the State of New York, $700mln in taxable debt from St Joseph’s Health, and $650mln in PA Turnpike Authority subordinated debt.  Supply is stronger this morning with $13 on tap over the next 30 days versus $12bln on Friday.

PR trading cooled off late in the week as dealers struggled to move paper.  We continue to see an aggressive bid for insured paper with bonds trading within a 5bp market for most insurers.  PR 8’s were unchanged with bonds trading @ 67F.

30 Day visible supply: 12.2bln